The construction performance index fell to 35.6 in February from 39.8 a month earlier, the 21st monthly decline, a survey by the Australian Industry Group and the Housing Industry Association released in Sydney today showed. A reading below 50 represents a contraction.

“The tentative signs of recovery that had emerged in the closing months of 2011 as interest rates were lowered appear to have dissipated since the start of this year,” Australian Industry Group Director of Public Policy Peter Burn said in a statement. “With new orders also weak in February and with market interest rates somewhat higher, the outlook for the next few months remains flat.” Tentative signs of recovery? With construction dropping 21 straight months? Really?

Service sector activity fell in February according to the latest seasonally adjusted Australian Industry Group/ Commonwealth Bank Australian Performance of Services Index (Australian PSI®) which was down 5.2 points to 46.7 in the month.

And in three-month-moving-average terms, the Australian PSI® has remained below the critical 50 point level for four consecutive months.

Reports of declining activity levels in February were common across the sector, with businesses reporting that sales, new orders and employment levels all fell back in the month.

The new orders component of the Australian PSI® recorded a particularly sharp fall, and is now at its lowest level in over 12 months.

In line with these soft trading conditions, the average selling price index declined in February, and is also at its lowest level in over 12 months.

New orders

On a seasonally adjusted basis, new order levels fell sharply in February after remaining broadly steady over much of the past year.

The new orders component of the Australian PSI® fell by 8.5 points to 45.6.

New order levels declined across most service sub-sectors in February, with particularly sharp declines reported in the retail trade and communication services sub-sectors.

This was only partly offset by solid growth in new orders in the finance & insurance and personal & recreational services sub-sectors.

Australia PSI

click on chart for sharper imageHuge Price Squeeze

Please take a good look at that chart. Wages have risen 31 months. Input prices have risen 108 consecutive months!

Every other component of the PSI is in contraction. Selling prices have fallen for 3 months while new orders have plunged.

Related

China’s recovery is in quite good shape
China’s economic growth accelerated for the first time in two years as government efforts to revive demand drove a rebound in industrial output, retail sales and the housing market.

Two more signs surfaced today that suggest Australia is headed for if not in recession.
Australia Services Index Plunges, Now in Contraction
Bloomberg reports Australian February Services Fall to Lowest in Almost a Year

Sydney (AFP) - Australia's economy slowed more than expected in the third quarter as an increase in exports was weighed down by falling private investment, data showed Wednesday, in another sign of the nation's rocky transition away from mining-led growth.

WASHINGTON — Orders for long-lasting U.S. manufactured goods recorded their biggest drop in seven months in March and a gauge of planned business spending rose modestly, adding to signs of a slowdown in factory activity.
Durable goods orders slumped 5.7% as demand fell almost across the board, the Commerce Department said on Wednesday. The drop last month in orders for these goods, which range from toasters to aircraft, followed a revised 4.3% increase in February.

WASHINGTON — The U.S. economy barely grew in the fourth quarter although a slightly better performance in exports and fewer imports led the government to scratch an earlier estimate that showed an economic contraction.
Gross domestic product expanded at a 0.1% annual rate, the Commerce Department said on Thursday, missing the 0.5% gain forecast by analysts in a Reuters poll.
The growth rate was the slowest since the first quarter of 2011 and far from what is needed to fuel a faster drop in the unemployment rate.